The Future Of Cryptocurrency: Will It Rise Or Fall

The year 2021 was a roller coaster ride for both the cryptocurrency and the investors. This year, Bitcoin hit multiple new all-time high prices and there was more institutional buy-in from major organizations. In 2021, the price of Bitcoin was up 309%, and Ethereum’s price was up 459%. Moreover, people’s interest in crypto has skyrocketed once the Biden administration expressed high interest in new regulations for cryptocurrency. However, the ban of cryptocurrency from the China government has made the year 2021 a mixed year for cryptocurrency. So, what’s the future of Cryptocurrency in the year 2022 and beyond.

If you closely look at the year 2021 then you will see that most of the cryptocurrencies have carried out the positive market momentum of 2020 in 2021. According to the crypto experts, in 2022 the crypto coins will continue the trend of 2021. Moreover, the demand and use of digital currencies will also increase in 2022 so the chances are the crypto market will have a bullish run in 2022 and build a strong foundation for the future!

Cryptocurrency Market Predictions For 2022

Predicting the future of the crypto market is very difficult but experts analyze the data and trends to predict the future of the market. Usually, there are far more questions than the answers but if you closely monitor a few overarching tendencies of crypto, you will be able to make better investing decisions. Some important details that you should monitor while investing in cryptocurrency are – 

1. Regulation in the U.S. and abroad

2. Mass-market adoption of cryptocurrency payments

3. Exchange-traded funds based on bitcoin and other digital currencies

The above issues develop and are resolved and they decide the fate of the crypto market. Below are some important predictions of the cryptocurrency market for 2022. Let’s check them out!

Bitcoin Will Outperform The S&P 500 In 2022

Through the year 2021, Bitcoin has outperformed the S&P 500 index. In 2021, Bitcoin was up 73%, while the S&P 500 is up 28% this year. Arcane believes that Bitcoin will continue this performance next year. XRP and Cardano will fall out of the top 10

According to many experts, XRP and Cardano will fall out of the top 10 list in 2022. The growth of market capitalization from altcoins such as Solana (SOL) and Terra (LUNA) has made the experts believe that XRP and Cardano (ADA) will exit the top 10 list.

Alternate Layer Ones Will Continue To Outperform ETH

In 2021, ETH outperformed BTC with a gain of 455% to 73%. But other layer-one blockchains also outperformed ETH. For example, Terra Luna ends 2021 up 14,823%; Fantom is up 13,549%.

Gaming Companies Will Increase Adding NFTs

The massive introduction of NFTs by traditional gaming companies will increase the demand for cryptocurrencies. For example, blockchain games like Splinterlands and Alien Worlds have around 526,000 daily active users. So many experts predict that in 2022, traditional gaming brands will branch into the NFT space and capitalize on the burgeoning market.

HashRate Will Become Even More Geographically Distributed           

After the ban of Bitcoin in China, the United States become the world leader in hash rate, followed by Kazakhstan and Russia. After the ban, Bitcoin’s global hash rate sharply fell but quickly recovered. It suggests that Hashrates are geographically distributed.

Bitcoin ETFs Will Hold More Than 1M BTC By End Of 2022

According to many experts, the hold of Bitcoin EFTs will increase in 2022 and it might be more than 1M BTC. Bitcoin EFTs was launched in 2021 and it currently has a collective hold of about 846,309 BTC and the collection will continue in 2022. Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno says – 

“The Bitcoin Futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved of rolling over contracts which amount to around 5-10%”

More Crypto Companies Will Go Public

In 2022, more cryptocurrency companies will go public. In 2021, Coinbase go public, and currently, it has a market cap of $72 million. The top five crypto companies are currently valued at over $1 billion. The number will increase once the companies will go public.

Bitcoin Will Crash

Many experts believe that Bitcoin will crash in the coming months. In November 2021 bitcoin’s price was $69,000 but later in December the price falls and now the price is sitting below $50,000, down almost 30% from its peak. Carol Alexander, professor of finance at Sussex University says – 

“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year”

Todd Lowenstein, chief equity strategist of Union Bank says – 

“Without question, Bitcoin’s price chart appears to track many historical asset bubbles and busts and is carrying a ‘this time it’s different’ narrative just like other bubbles, Goldilocks conditions are ending and the liquidity tide is receding which will disproportionately harm overvalued asset classes and speculative areas of the market including cryptocurrencies”

A Big Year On The Regulatory Front

Countries around the world are flexing their muscles on cryptocurrencies. For example, China completely banned all crypto-related activities; USA authorities have also cracked down on certain aspects of the market. Therefore, many crypto experts believe that regulation will be a key issue in 2022 for investors. Luno’s Ayyar says – 

“2022 will be a big year on the regulatory front, no doubt, The interest from various governments, and especially the U.S., to bring regulation into the crypto space has not been higher”

Moreover, there will be many clarifications on the legal “gray zone” of cryptocurrencies other than bitcoin and Ethereum but they are not securities. For example, the blockchain company Ripple is fighting with the U.S. watchdog over XRP. The SEC alleges XRP is unregistered security and that $1.3 billion worth of the tokens was illegally sold by Ripple and two of its executives. Moreover, regulators will also focus on stable coins because their value is tied to the price of existing assets like the U.S. dollar. Lowenstein says – 

“Undoubtedly more scrutiny is forthcoming around stable coins as regulators look under the hood on the soundness of the underlying collateral and amount of leverage deployed, People remember all too well when the collateral behind the housing and mortgage crises became suspect and risk appetites repriced aggressively.

Why Cryptocurrency Could Be The Future Of Money

According to many predictions from crypto experts, regulators around the world might come up with a global framework for crypto regulation in 2022. Recently, USA president Joe Biden and his administration have put together a highly qualified team to regulate the cryptocurrency regulation process led by U.S. Treasury Secretary Janet Yellen and the chairman of the U.S. Securities and Exchange Commission, Gary Gensler. Highly knowledgeable people setting the tone for future regulations of digital coins so the hopes are high that a workable system will be developed for investors, consumers, cryptocurrency businesses, and traditional banks. Moreover, cryptocurrencies could be available in the digital wallets of U.S. consumers on a large scale. Many retailers have also started to accept payment in cash-like digital currencies such as Bitcoin, Ripple’s XRP, or Litecoin, etc. The increased use of crypto will benefit the blockchain system.

Why Cryptocurrency May Not Be The Future Of Money

The advancement of cryptocurrency in 2022 and beyond could delay for several reasons like – 

1. The policymakers might fail to reach a sensible regulatory framework in 2022

2. Policymakers might think cryptocurrencies like Bitcoin and Litecoin only serve illegal activities and bad actors

3. Retailers might find the unpredictable value of digital currencies risky and insist on traditional cash or credit card transactions instead

If the above speculation becomes real then the digital currency revolution could be delayed by several years. It is highly unlikely that any government or group of nations will stop the cryptocurrency but chances are they can slow down the movement and steer the final product in various directions. Tough under the current situation the risks might sound hypothetical but anything is possible and can happen in the crypto world. Therefore, the cryptocurrency community must get along with regulators around the world to continue the progress of digital currency.

Final Thoughts

Finally, the future of Cryptocurrency is still very much in question. There is no doubt that cryptocurrency has limitless potential but you also can’t ignore the risk factor involved with digital currencies. The year 2022 is very critical for cryptocurrency because what happens in this year will determine the fate of cryptocurrency.

References:

1. https://time.com/nextadvisor/investing/cryptocurrency/future-of-cryptocurrency/
2. https://www.gwi.com/connecting-the-dots/future-of-cryptocurrency

Last Updated on February 7, 2022 by